Kulicke & Soffa Reports Third Quarter 2022 Results
Kulicke and Soffa (NASDAQ: KLIC) announced its Q3 2022 financial results, reporting net revenue of $372.1 million, a decrease of 12.3% year-over-year. Net income stood at $119.0 million with diluted EPS of $1.99, reflecting an 11.2% increase. Gross margin improved to 51.2%, up 510 bps from the prior year. The company generated $380 million in free cash flow over the past year and returned $263 million to shareholders through buybacks and dividends. For Q4 2022, KLIC expects revenue of approximately $280 million +/- $20 million and non-GAAP EPS of $0.93 +/- 10%.
- Net income increased by 4.6% year-over-year to $119.0 million.
- Diluted EPS rose 11.2% to $1.99.
- Gross margin improved to 51.2%, up 510 bps year-over-year.
- Generated $380 million in free cash flow over the past four quarters.
- Returned $263 million to shareholders via repurchase and dividend programs.
- Net revenue decreased by 12.3% year-over-year.
- Gross profit declined by 2.6% from the previous year.
- Operating margin fell by 90 bps compared to the previous quarter.
Delivers Strong Financial Performance; Strategic Execution Continues
SINGAPORE, Aug. 3, 2022 /PRNewswire/ -- Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) ("Kulicke & Soffa," "K&S" or the "Company"), today announced financial results of its third fiscal quarter ended July 2, 2022. The Company reported third quarter net revenue of
Quarterly Results - U.S. GAAP | |||
Fiscal Q3 2022
| Change vs. Fiscal Q3 2021 | Change vs. Fiscal Q2 2022 | |
Net Revenue | down | down | |
Gross Profit | down | down | |
Gross Margin | 51.2 % | up 510 bps | down 130 bps |
Income from Operations | up | down | |
Operating Margin | 32.8 % | up 440 bps | down 90 bps |
Net Income | up | up | |
Net Margin | 32.0 % | up 520 bps | up 180 bps |
EPS – Diluted | up | up | |
Quarterly Results - Non-GAAP | |||
Fiscal Q3 2022
| Change vs. Fiscal Q3 2021 | Change vs. Fiscal Q2 2022 | |
Income from Operations | up | down | |
Operating Margin | 34.7 % | up 500 bps | down 50 bps |
Net Income | up | up | |
Net Margin | 33.6 % | up 560 bps | up 200 bps |
EPS – Diluted | up | up | |
A reconciliation between the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also the "Use of non-GAAP Financial Results" section.
Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, "Throughout the June quarter, we have continued to execute several new product development initiatives while generating strong earnings and aggressively returning capital to shareholders."
Over the prior four quarters, K&S has generated
Third Quarter Fiscal 2022 Financial Highlights
- Net revenue of
$372.1 million . - Gross margin of
51.2% . - Net income of
$119.0 million or$1.99 per share; non-GAAP net income of$125.1 million or$2.09 per share. - Cash, cash equivalents, and short-term investments were
$745.8 million as of July 2, 2022. - The Company repurchased a total of 1.0 million shares of common stock through its open market and accelerated repurchase programs at a cost of
$61.1 million .
Fourth Quarter Fiscal 2022 Outlook
The Company currently expects net revenue in the fourth fiscal quarter of 2022 ending October 1, 2022 to be approximately
Fusen Chen commented, "While the near-term macro environment remains dynamic, over the past several years we have broadened our market access, expanded customer engagements and are now intimately supporting several long-term technology transitions. We expect these efforts have materially increased our long-term growth potential while sustainably enhancing our through-cycle earnings potential."
Earnings Conference Call Details
A conference call to discuss these results will be held on August 4, 2022, beginning at 8:00am EDT. To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. A live webcast link and supplemental earnings presentation will also be available at investor.kns.com.
A replay will be available from approximately one hour after the completion of the call through August 11, 2022 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13730497. A webcast replay will also be available at investor.kns.com.
Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains the following non-GAAP financial results: income from operations, operating margin, net income, net margin and net income per diluted share. The Company's non-GAAP results exclude amortization related to intangible assets acquired through business combinations, costs associated with restructuring and severance, equity-based compensation, acquisition and integration costs, impairment relating to assets acquired through business combinations, impairment relating to equity investments, income tax expense arising from discrete tax items triggered by acquisition, restructuring and significant changes in tax laws, gain/loss on disposal of business, as well as tax benefits or expenses associated with the foregoing non-GAAP items. The non-GAAP adjustments may or may not be infrequent or nonrecurring in nature, but are a result of periodic or non-core operating activities. These non-GAAP measures are consistent with the way management analyzes and assesses the Company's operating results. The Company believes these non-GAAP measures enhance investors' understanding of the Company's underlying operational performance, as well as their ability to compare the Company's period-to-period financial results and the Company's overall performance to that of its competitors.
Management uses both U.S. GAAP metrics as well as these non-GAAP metrics to evaluate the Company's operating and financial results. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company's industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on the Company's reported financial results. The presentation of non-GAAP items is meant to supplement, but not substitute for, GAAP financial measures or information. The Company believes the presentation of non-GAAP results in combination with GAAP results provides better transparency to the investment community when analyzing business trends, providing meaningful comparisons with prior period performance and enhancing investors' ability to view the Company's results from management's perspective. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the financial tables at the end of this press release.
Management has not reconciled its outlook for non-GAAP Diluted EPS to Diluted EPS for Q4F22 as it does not provide guidance on the reconciling items between Diluted EPS and non-GAAP Diluted EPS, as a result of the uncertainty regarding, and the potential variability of, these items. The actual amount of such reconciling items could have a significant impact on our non-GAAP Diluted EPS and, accordingly, a reconciliation of Diluted EPS to non-GAAP Diluted EPS for Q4F22 is not available without unreasonable effort.
About Kulicke & Soffa
Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor, LED and electronic assembly solutions serving the global automotive, consumer, communications, computing and industrial markets. Founded in 1951, K&S prides itself on establishing foundations for technological advancement - creating pioneering interconnect solutions that enable performance improvements, power efficiency, form-factor reductions and assembly excellence of current and next-generation semiconductor devices.
Leveraging decades of development proficiency and extensive process technology expertise, Kulicke & Soffa's expanding portfolio provides equipment solutions, aftermarket products and services supporting a comprehensive set of interconnect technologies including wire bonding, advanced packaging, lithography, mini and micro LED transfer and electronics assembly. Dedicated to empowering technological discovery, always, K&S collaborates with customers and technology partners to push the boundaries of possibility, enabling a smarter future.
Caution Concerning Results and Forward-Looking Statements
In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, the effects of the COVID-19 pandemic, supply chain constraints and macroeconomic conditions on our business, and the other factors listed or discussed in our Annual Report on Form 10-K for the fiscal year ended October 2, 2021, filed on November 18, 2021, and our other filings with the Securities and Exchange Commission. Kulicke and Soffa Industries, Inc. is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
Contacts:
Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations
P: +1-215-784-7518
F: +1-215-784-6180
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share and employee data) (Unaudited) | |||||||
Three months ended | Nine months ended | ||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | ||||
Net revenue | $ 372,137 | $ 424,318 | $ 1,217,307 | $ 1,032,338 | |||
Cost of sales | 181,452 | 228,623 | 601,674 | 566,667 | |||
Gross profit | 190,685 | 195,695 | 615,633 | 465,671 | |||
Operating expenses: | |||||||
Selling, general and administrative | 33,453 | 37,763 | 104,940 | 99,038 | |||
Research and development | 34,046 | 36,137 | 104,496 | 102,549 | |||
Amortization of intangible assets | 1,109 | 1,340 | 3,543 | 4,652 | |||
Acquisition-related costs | — | — | — | 1,730 | |||
Restructuring | — | — | 126 | 91 | |||
Total operating expenses | 68,608 | 75,240 | 213,105 | 208,060 | |||
Income from operations | 122,077 | 120,455 | 402,528 | 257,611 | |||
Other income (expense): | |||||||
Interest income | 2,158 | 564 | 3,099 | 1,801 | |||
Interest expense | (36) | (41) | (173) | (146) | |||
Income before income taxes | 124,199 | 120,978 | 405,454 | 259,266 | |||
Income tax expense | 5,165 | 7,212 | 36,813 | 25,722 | |||
Share of results of equity-method investee, net of tax | — | — | — | 94 | |||
Net income | $ 119,034 | $ 113,766 | $ 368,641 | $ 233,450 | |||
Net income per share: | |||||||
Basic | $ 2.02 | $ 1.83 | $ 6.05 | $ 3.76 | |||
Diluted | $ 1.99 | $ 1.79 | $ 5.95 | $ 3.68 | |||
Cash dividends declared per share | $ 0.17 | $ 0.14 | $ 0.51 | $ 0.42 | |||
Weighted average shares outstanding: | |||||||
Basic | 58,985 | 62,023 | 60,951 | 62,023 | |||
Diluted | 59,955 | 63,485 | 61,940 | 63,364 | |||
Three months ended | Nine months ended | ||||||
Supplemental financial data: | July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | |||
Depreciation and amortization | $ 5,210 | $ 4,805 | $ 15,773 | $ 14,552 | |||
Capital expenditures | 4,953 | 7,956 | 11,213 | 16,763 | |||
Equity-based compensation expense: | |||||||
Cost of sales | 193 | 211 | 727 | 626 | |||
Selling, general and administrative | 3,233 | 3,008 | 10,485 | 8,111 | |||
Research and development | 1,039 | 921 | 3,261 | 2,767 | |||
Total equity-based compensation expense | $ 4,465 | $ 4,140 | $ 14,473 | $ 11,504 | |||
As of | ||||||||||
July 2, 2022 | July 3, 2021 | |||||||||
Number of employees | 3,405 | 3,583 | ||||||||
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands) (Unaudited) | |||
As of | |||
July 2, 2022 | October 2, 2021 | ||
ASSETS | |||
CURRENT ASSETS | |||
Cash and cash equivalents | $ 445,781 | $ 362,788 | |
Short-term investments | 300,000 | 377,000 | |
Accounts and other receivable, net of allowance for doubtful accounts of | 350,045 | 421,193 | |
Inventories, net | 215,281 | 167,323 | |
Prepaid expenses and other current assets | 75,011 | 23,586 | |
TOTAL CURRENT ASSETS | 1,386,118 | 1,351,890 | |
Property, plant and equipment, net | 66,510 | 67,982 | |
Operating right-of-use assets | 41,160 | 41,592 | |
Goodwill | 69,787 | 72,949 | |
Intangible assets, net | 35,291 | 42,752 | |
Deferred tax assets | 21,103 | 15,715 | |
Equity investments | 5,397 | 6,388 | |
Other assets | 2,911 | 2,363 | |
TOTAL ASSETS | $ 1,628,277 | $ 1,601,631 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
CURRENT LIABILITIES | |||
Accounts payable | 98,572 | 154,636 | |
Operating lease liabilities | 5,973 | 4,903 | |
Accrued expenses and other current liabilities | 138,434 | 161,570 | |
Income taxes payable | 31,060 | 30,766 | |
TOTAL CURRENT LIABILITIES | 274,039 | 351,875 | |
Deferred income taxes | 34,541 | 32,828 | |
Income taxes payable | 62,468 | 69,422 | |
Operating lease liabilities | 35,836 | 38,084 | |
Other liabilities | 14,660 | 14,185 | |
TOTAL LIABILITIES | 421,544 | 506,394 | |
SHAREHOLDERS' EQUITY | |||
Common stock, no par value | 557,236 | 550,117 | |
Treasury stock, at cost | (615,689) | (400,412) | |
Retained earnings | 1,286,505 | 948,554 | |
Accumulated other comprehensive loss | (21,319) | (3,022) | |
TOTAL SHAREHOLDERS' EQUITY | $ 1,206,733 | $ 1,095,237 | |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,628,277 | $ 1,601,631 | |
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
Three months ended | Nine months ended | ||||||
July 2, 2022 | July 3, 2021 | July 2, 2022 | July 3, 2021 | ||||
Net cash provided by operating activities | $ 104,616 | $ 90,936 | $ 273,625 | $ 176,656 | |||
Net cash (used in) / provided by investing activities | (75,119) | 52,222 | 66,342 | 54,221 | |||
Net cash used in financing activities | (39,841) | (12,865) | (250,905) | (31,982) | |||
Effect of exchange rate changes on cash and cash equivalents | (4,328) | 373 | (6,069) | 977 | |||
Changes in cash and cash equivalents | (14,672) | 130,666 | 82,993 | 199,872 | |||
Cash and cash equivalents, beginning of period | 460,453 | 257,333 | 362,788 | 188,127 | |||
Cash and cash equivalents, end of period | $ 445,781 | $ 387,999 | $ 445,781 | $ 387,999 | |||
Short-term investments | 300,000 | 247,000 | 300,000 | 247,000 | |||
Total cash, cash equivalents and short-term investments | $ 745,781 | $ 634,999 | $ 745,781 | $ 634,999 | |||
Reconciliation of U.S. GAAP to Non-GAAP Income from Operations and Operating Margin (In thousands, except percentages) (Unaudited) | ||||||
Three months ended | ||||||
July 2, 2022 | July 3, 2021 | April 2, 2022 | ||||
Net revenue | $ 372,137 | $ 424,318 | $ 384,282 | |||
U.S. GAAP income from operations | 122,077 | 120,455 | 129,341 | |||
U.S. GAAP operating margin | 32.8 % | 28.4 % | 33.7 % | |||
Pre-tax non-GAAP items: | ||||||
Amortization related to intangible assets acquired through business combination- selling, general and administrative | 1,109 | 1,340 | 1,151 | |||
Equity-based compensation | 4,465 | 4,140 | 4,696 | |||
Impairment charges | 1,346 | — | — | |||
Non-GAAP income from operations | $ 128,997 | $ 125,935 | $ 135,188 | |||
Non-GAAP operating margin | 34.7 % | 29.7 % | 35.2 % | |||
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and U.S. GAAP net income per share to Non-GAAP net income per share (In thousands, except percentages and per share data) (Unaudited) | ||||||
Three months ended | ||||||
July 2, 2022 | July 3, 2021 | April 2, 2022 | ||||
Net revenue | $ 372,137 | $ 424,318 | $ 384,282 | |||
U.S. GAAP net income | 119,034 | 113,766 | 116,001 | |||
U.S. GAAP net margin | 32.0 % | 26.8 % | 30.2 % | |||
Non-GAAP adjustments: | ||||||
Amortization related to intangible assets acquired through business combination- selling, general and administrative | 1,109 | 1,340 | 1,151 | |||
Equity-based compensation | 4,465 | 4,140 | 4,696 | |||
Impairment charges | 1,346 | — | — | |||
Net income tax (benefit)/expense on non-GAAP items | (865) | (460) | (385) | |||
Total non-GAAP adjustments | $ 6,055 | $ 5,020 | $ 5,462 | |||
Non-GAAP net income | $ 125,089 | $ 118,786 | $ 121,463 | |||
Non-GAAP net margin | 33.6 % | 28.0 % | 31.6 % | |||
U.S. GAAP net income per share: | ||||||
Basic | 2.02 | 1.83 | 1.89 | |||
Diluted(a) | 1.99 | 1.79 | 1.86 | |||
Non-GAAP adjustments per share:(b) | ||||||
Basic | 0.10 | 0.08 | 0.09 | |||
Diluted | 0.10 | 0.08 | 0.09 | |||
Non-GAAP net income per share: | ||||||
Basic | $ 2.12 | $ 1.91 | $ 1.98 | |||
Diluted(c) | $ 2.09 | $ 1.87 | $ 1.95 | |||
Weighted average shares outstanding: | ||||||
Basic | 58,985 | 62,023 | 61,482 | |||
Diluted | 59,955 | 63,485 | 62,435 | |||
(a) | GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net loss per share because it would be anti-dilutive. |
(b) | Non-GAAP adjustments per share include amortization related to intangible assets acquired through business combinations, equity-based compensation expenses, impairment relating to equity investments, and income tax effects associated with the foregoing non-GAAP items. |
(c) | Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options. |
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SOURCE Kulicke & Soffa Industries, Inc.
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